Telangana taking a lead in defence

Level playing field for MSMEs, proposed incubator to strengthen the sector.

By Author  |  Business Bureau  |  Published: 11th Oct 2017  4:52 pmUpdated: 11th Oct 2017  7:29 pm
Defence Sector in Telangana

Hyderabad: Hyderabad has emerged as a major investment destination for both the aerospace and defence sectors. Almost 1,000 MSMEs are operating in this space which adds up the presence of large defence establishments and labs. There is a growing interest among companies both domestic and foreign to set up their manufacturing operations here.

Telangana Industries secretary Jayesh Ranjan said the government knows that given a level playing field, MSMEs can contribute to the growth of the industry. The State with the help of industry and DIIA can explore setting up of testing facilities that will benefit the smaller companies which cannot invest in such infrastructure.

Jayesh Ranjan
File photo: Telangana IT Secretary Jayesh Ranjan.

While addressing a national seminar organised by Defence Innovators & Industry Association (DIIA) focusing on the theme ‘Buiding Alliances for Self-reliance’ held at Hyderabad on Wednesday, Ranjan said, the government is consciously developing an aerospace and defence cluster which houses atleast a dozen companies that are collaborating or serving global majors.
FTAPCCI president Gowra Srinivas said States can take focused actions to boost the industry. Telangana government is providing the needed ecosystem for MSMEs and large enterprises to co-exist, collaborate and serve Indian aerospace and defence requirements. The State is focusing on ease of doing business and attracting investors to set up manufacturing units as Hyderabad has a strong base of defence labs, PSUs and MSMEs operating as a cluster.

Through Research and Innovation Circle of Hyderabad (RICH), the State is making efforts to connect the industry with the research and scientific pool available.  Emphasising the need for boosting entrepreneurship, Cyient chairman and managing director BVR Mohan Reddy said, small companies have more scope to innovate and generate jobs and the last 10 years data shows that 70 per cent of the jobs in the industry are created by them. Government should create an enabling environment for new companies to come up and innovate and bring in new technologies. There is a need to include people, processes, tool, technologies and training into the framework that will help companies scale up.

Quoting T-Hub’s success and contribution in Telangana, he said, the incubator has proved that technologies and entrepreneurs can dirupt the way the world works. The State can create a defence incubator which could offer what benefits T-Hub offered in IT. Ranjan added that the TS government has already presented a proposal to the Centre to create a defence incubation centre on the lines of T-Hub. BJP national general secretary P Muralidhar Rao said Hyderabad has become the epicenter for the defence industry in the country.

Domestic manufacturing

Indian defence sector is heavily import dependent with about 60-70 per cent of material and equipment coming from other countries. Both the government and the industry are making efforts to indigenise manufacturing but more collaboration is needed to reverse the import component and become fully self-reliant.

Defence Innovators & Industry Association (DIIA) director R K Tyagi said, “Foreign original equipment manufacturers (OEMs) are dominating the supplies today. Certain policy changes made by the Central government are gradually opening avenues for private sector. Micro, small and medium enterprises (MSMEs) in the private sector should gear up to grab the opportunities.”

Currently, about 150 MSMEs companies are part of the global supply chain and the nation needs more. The Centre is considering creation of a national defence innovation fund which should help the small companies to develop technology and equipment and serve both domestic and global market needs. Some green shoots of recovery are visible. Airbus procures $500 million worth supplies from India companies.

The government should focus on setting up common testing facilities so that smaller companies do not have to invest in them. By virtue of their size and scale of operations, small companies lack funds either to invest on testing facilities or spend on certification. Government should also ensure that MSMEs in defence get consistent orders as the current order visibility is only for about two years while for fresh orders, it’s always expected that these suppliers have 5-7 years of order visibility, Tyagi pointed out.